Do we have enough to retire?

[FabLab]

One of the nuttiest threads I've read on bogleheads. Methinks, somehow, someway, other couples have managed to retire with $3M - $3.5M net worth. A $300K house for this couple amounts to chicken feed. Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!

[Clearly_Irrational]

Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!

That would depend on whether it's pre-tax or after tax. If it's after tax that rate is probably not sustainable on a portfolio that size. (At a guess that would be around a 4.7% withdrawal rate) If it's pretax we're only talking about 3.1% which should work fine.

[Peter Foley]

Rusa wrote:

We are not big spenders, like to have an occasional visit to the beach, have always lived well below means so can continue easily after retirement.

Absolutely you have enough to retire. Because you have the habit and desire to live below your means, I think you will do fine. While you did not ask the question, I think your AA is just fine as well. You have no need to take risk.

[letsgobobby]

Maybe for some of you $3.2M is a lot. It's not a lot if you spend 4% of it every year; with no reported plan for health care for the next seven years.

Sure, everything will probably be fine. But as I wrote, it isn't a gimme. There's some risk and it's not 1%.

We can only go by the reported information. She didn't say they spend $120k and would be happy to spend $70k. She didn't say whether there are heirs, adult dependents, etc. She didn't say whether they want to work part time or not. She didn't talk about her/his SS benefits in 4 or 7 or 12 years. She asked if she had enough to retire.

Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.

[Jim85]

The OP better have enough to retire or I'm working a lot longer than I thought. I can't believe any of the "live below your means" crowd could think $3.2m is not enough at 58.

[livesoft]

And they can work it, so they don't have to pay income taxes, too: viewtopic.php?t=87471

[livesoft]

There are many calculators that try to answer the question. Have you tried them?

One's I would use are http://www.firecalc.com , Fidelity's Retirement Income Planner, and Otar's flexible retirement planner.

Does firecalc still not account for taxes? It would be the best tool if it did, but without that, I have trouble trusting it's conclusions without making a bunch of complicated adjustments.

FIRECalc has always accounted for taxes. It has never not accounted for taxes.

[ResNullius]

I think you're close, but a 4% withdrawal rate is not a sure thing. On the bright side, you will be eligible for social security within the next decade, which will help a lot.

And they're both high earners, so SS benefits are going to be close to 2000/month EACH... They'll be getting at least $40k (inflation-indexed) a year from SS someday.

I currently get $30K per year in SS, not counting my wife (and she will get close to the max when she hits the magic age). On top of this, I get Medicare, which saves me a fortune over what I was paying for individual BCBS. My wife will get a similar savings when she hits Medicare.

[MnD]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

[HomerJ]

Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.

But again, that 5% chance is not that they run out of money, but that they cut back to 3 big vactions a year instead of 5.

[HomerJ]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.

[Confused]

whether I still like my work more than other ways of spending my time, not on SWR hair splitting.

How on Earth could you ever like your work more than other ways of spending your time? Work provides one benefit - money. If I don't need money, I'm not working.

[Grt2bOutdoors]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

I second that, best post of the work week!

[suming]

Hi, MnD
The best post ever...
Very curious how the OP's thought about that?

[gkaplan]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.

I'd be hard pressed to disagree.

[downshiftme]

If you invest like Bogleheads and stick to your 120K gross withdrawal rate (including taxes, expenses and everything) you should be fine. It's a lot more than I am planning to retire with.

The only cases I know where people with this kind of asset base ran into problems were out of control spending or taking a flier on some crazy investment theory that went bad and wiped out millions. If you stay reasonably diversified, you should be golden.

[Peter Foley]

Great post MnD. I had to share it with my wife.

[ebeard]

Two 58 year olds with $3.5 million in assets, no debt at all, currently renting but plan to buy living space in the next two years with money from recent sale of house. Current asset allocation is 40 stocks/60 bonds and lots of cash from recent house sale. Wife is (more than) ready to retire from Biglaw at the end of the year. Hubby may want to retire from medical doctor work a year or so later. Practicing the Boglehead way with stock investments in Vanguard index funds VTI, VNQ, VEU and bonds in Vanguard BND and TIP. Will be moving back to Denver, CO after Hubby retires from current job in DC. We are not big spenders, like to have an occasional visit to the beach, have always lived well below means so can continue easily after retirement.

Any thoughts would be appreciated.

Firecalc says 96% chance of success! Retire today!
Run Firecalc yourself

[lwfitzge]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

I second that, best post of the work week!

Love this post....thanks

[K-Bogle]

Great post MnD. I had to share it with my wife.

Funny, I also shared it with my wife immediately upon reading it. And shared a promise that we'd never let this happen to us.

Not to criticize the OP or her particular situation, but I sincerely hope I'd be willing to cut the cord much sooner and use my remaining youth to enjoy the lifestyle that money can't buy.

[Investor2]

Rusa, yes, you have the Bogleheads' permission to retire from Biglaw at the end of this year - or tomorrow morning, if you prefer. Congratulations!

[HomerJ]

Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

That's the best part...

People who say work longer because 3.5 million isn't enough just don't understand the point of saving all that money in the first place.

[ricb]

Using the 3-Fund Portfolio, is there a formula correlating TSM/TBM ratios to annual withdraw rates and number of years the portfolio is to last?

For example, will this $3.2M last for 30 years with a 2.5% annual withdraw rate using a 30/70 TSM/TBM?

[whitefish]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

Best. Freaking. Post. Ever.

I'm serious. This is the best post I've ever read on these forums.

Amen.

[Cb]

In view of their work backgrounds, if the market were to crater in the early years of their retirement they might still be able to find some sort of work, like delivering pizzas or mowing lawns to address any shortfall that might appear.

Cb

[Rusa]

Bill Bernstein, a well respected advisor, has said "Two percent is bullet-proof, 3% is probably safe, 4% is pushing it." I'm not sure anything is bullet-proof.

I would argue that spending the dividends + interest on your portfolio is bullet proof. Currently that's 2.4% for a 40/60 portfolio. Any conditions that resulted in that not being true would also likely lead to the collapse of modern society.

This is what we are hoping to be able to do, with occasional raids on the principle. Of course, if you read The Long Emergency, as I have, the collapse of modern society is inevitable and we will have a lot more to worry about than outliving our savings.

[Rusa]

We plan to spend about $300K on a house. Current yearly living expenses are about $100K - $120K, so a pretty good quality of life

Hi Rusa,

We live in Denver suburb in a home worth around $325K and have living expenses of around $90K after college costs for kids, taxes and retirement savings so i can give you an idea of that lifestyle. It's pretty rough so be prepared. Heed the advice of those here that say you are on the bleeding edge of a possible retirement. It won't be pretty as you can see from our situation. if things went not as well as expected investment-wise, you could even be living on our budget - yikes!

The home is only 2500SF, the yard barely 3/4 acre and one of our three vehicles is over eight years old.

Next month in Hawaii on vacation we will only be in a private beachfront single family home for one week. The other 9 days we'll be in a large modern condo that's beachside and that has three other units in it. Ugh! We had to use FF miles to upgrade our flights to first class!

While we don't have to worry/think about budgeting, price of food, gas, utilities, entertainment, clothing, housecleaning service, etc,. we only have about $250 a day to work with after college, taxes, savings etc. It's not unlimited. So while we have four "shovel-ready" projects we'd like to do, (redo the yard pond, have the entire exterior house painted, put in a home gym and gut and redo the office, It's pretty apparent that we are only going to be be able to hire out to get two of those four projects done this year. Only two of four I tell you! Two will have to wait till next year!

Please consider working in those high stress DC jobs until at least 70 when you can have a more reasonable $5 million or so plus taking immediate maxed out social security. You won't regret another 12 years of the high stress grind. Those 12 years will fly by and then you can have a truly financially secure retirement. You even might be able to skip the house purchase and go straight into assisted living with more predictable costs.

Best reply ever! May I call you when we get back to Denver (we are only in DC temporarily) and buy you a (cheap Coors light) beer (at happy hour at a two-for-one bar so I can have one too)?

[Rusa]

Thanks everyone, for your kind thoughts and responses. I obviously didn't provide sufficient information but you've given us a lot to consider before I pull the plug on that Biglaw job.

[letsgobobby]

Based on the information provided, the answer is: yes, and most likely everything will be ok. But there's about a 5% chance it won't be.

But again, that 5% chance is not that they run out of money, but that they cut back to 3 big vactions a year instead of 5.

It may not be obvious cutbacks are necessary until bigger cutbacks than that are retired. That's what firecalc takes into account.

If they are as happy living on $80 as $120 then there is no issue.

Health care is totally unaddressed, as is long term care.

SS though will be meaningful, so unless they get unlucky with health care and an early bad sequence of returns they should be fine.

[LH]

Also, I don't consider annual expenses of $100K - $120K to be a big deal (it's what we run in retirement as well). Enjoy your lives!

That would depend on whether it's pre-tax or after tax. If it's after tax that rate is probably not sustainable on a portfolio that size. (At a guess that would be around a 4.7% withdrawal rate) If it's pretax we're only talking about 3.1% which should work fine.

Well, the tax rate at retirement is very low usually, which surprised me. a lot of retirees pay very low tax.

No medicare, no SS. (no employment tax)

Taxable investment, some of it is basis, not taxed.

Roth, not taxed.

Dividends 15 percent.

80 percent of SS, not taxed (I think, kinda pulled that out of nowhere) at their level. (or maybe 80 percent taxed, 20 percent not.. hmmm)

Anyway, talking to retirees, they just dont pay much tax it seems, surprisingly enough.